Unit 6 (thus far)

Which of the following best demonstrates nonrivalry in consumption?

• Occupying a seat in a sold-out movie theatre

• Sharing rent equally among roommates

• Catching fish in a local pond

• Playing golf on a crowded public golf course

• Listening to a radio program

Which of the following is the best example of a pure public good?

• Electricity from a public utility

• Mail delivery service by the post office

• Social Security payments

• National defense

• Imported oil

Which of the following is the best example of the free-rider problem?

• A company gives away free samples of a new product.

• A single firm is the sole supplier of corn oil.

• There are economies of scale in the production of passenger elevators.

• It is difficult to exclude those who do not pay for a good from enjoying the benefits of the good.

• There is free entry and exit into production of toothpaste, but products are not homogeneous.

When an externality exists in a market, which of the following best describes where total surplus is maximized?

• The quantity where marginal social benefit equals marginal private cost.

• The quantity where marginal social benefit is higher than marginal private benefit

• The quantity where marginal social cost is higher than marginal private cost

• The quantity where marginal social cost equals marginal social benefit.

• The quantity where marginal social cost equals marginal private benefit.

Which of the following is true based on the graph above?

• Quantity of education in the private market is more than the socially optimal quantity.

• Consumers of education could be subsidized in order to achieve the socially optimal quantity.

• Producers of education could be taxed in order to achieve the socially optimal quantity.

• Consumers of education could be taxed in order to achieve the socially optimal quantity.

• Consumption of education has a negative externality.

The market for gleems is shown in this graph, including marginal social cost (MSC), marginal social benefit (MSB), and marginal private cost (MPC). Which of the following is true based on this graph?

• Consumers of gleems should be subsidized to achieve the socially optimal quantity of gleems.

• The market quantity has a marginal social benefit that exceeds the marginal social cost.

• There are positive externalities in the consumption of gleems and the market will produce less than is socially optimal.

• This market produces the socially optimal quantity of gleems without intervention.

• There are negative externalities in the production of gleems and the market will produce more than is socially optimal.

This graph shows the marginal social cost (MSC), marginal private benefit (MPB), and the marginal social benefit) associated with the market for snizzles. What is the marginal social benefit of the last unit purchased in this market with no intervention?

• $4

• $6

• $8

• $10

• $12

There is a negative production externality in the market for peanut butter. Which of the following best describes what is true about quantity sold in this market?

• The marginal social cost of production equals the marginal private cost of production

• The marginal social cost of that quantity exceeds its marginal private cost.

• The marginal social cost of benefit exceeds the marginal private benefit of consumption.

• The marginal social cost is less than the marginal private cost.

• The marginal social benefit of consumption is less than the marginal private benefit of consumption

This graph shows a perfectly competitive unregulated market for books with marginal social cost (MSC), marginal social benefit (MSB), and marginal private benefit (MPB).Which of the following statements is true based on this graph?

• Sellers should be taxed to generate the socially efficient quantity.

• Buyers of books could be subsidized to generate the socially efficient quantity

• Consumption of books has a negative externality

• The quantity sold in this market is socially optimal

• A binding price ceiling should be imposed on this market to generate the socially efficient quantity.

The marginal social cost (MSC), marginal private cost (MPC), and marginal social benefit (MSB) associated with the production of a good are shown in this graph. If this market is unregulated, what area represents deadweight loss?

• P4, P3, e

• geh

• ehf

• P3, e, P1

• P4, P1, h